10 Low Price-to-Sales Stocks With Encouraging Trends

Stocks with a growing and strengthening business are usually considered strong investment possibilities. The price to sales ratio is similar to the P/E ratio, but it takes the share price and divides it by the revenue per share instead of the earnings. It compares the revenue per share to the share prices and is useful when comparing similar companies.

We decided to run a screen on a universe of stocks with low price to sales ratios; then we looked for encouraging sales trends and higher growth in revenue than inventory year over year. We also looked for inventory comprising a smaller portion of current assets over the same time period.

To understand why these inventory trends are positive, think why the opposite trends would be negative. If a company sees higher growth in inventory than revenue, it may indicate that the company is having trouble selling its inventory.

The receivables trends are also useful because it can help gauge if the quality of sales, not just quantity, is increasing over time. If the receivables are reducing while revenue is increasing, it shows less liability because they have received the money for the sales they made.

Business section: Investing ideasBelow is the final screen from the information above. We started the screen with stocks with P/S ratios under 1, then screened for companies with faster increasing revenue than inventory.

Then we took those results and checked for the revenue growing faster than receivables, indicating more quality sales.

1. ExxonMobil (NYSE: XOM) : Engages in the exploration and production of crude oil and natural gas, and manufacture of petroleum products, as well as transportation and sale of crude oil, natural gas, and petroleum products. Market cap at $362.95B, most recent closing price at $77.83. P/S ratio at 73%. Revenue grew by 8.81% during the most recent quarter ($124,053M vs. $114,004M y/y). Accounts receivable grew by 1.99% during the same time period ($35,844M vs. $35,146M y/y). Receivables, as a percentage of current assets, decreased from 48.8% to 47.06% during the most recent quarter (comparing 3 months ending 2012-03-31 to 3 months ending 2011-03-31). Revenue grew by 8.81% during the most recent quarter ($124,053M vs. $114,004M y/y). Inventory grew by -9.3% during the same time period ($14,749M vs. $16,262M y/y). Inventory, as a percentage of current assets, decreased from 22.58% to 19.37% during the most recent quarter (comparing 3 months ending 2012-03-31 to 3 months ending 2011-03-31).

2. Boeing (NYSE: BA) : Engages in the design, development, manufacture, sale, and support of commercial jetliners, military aircraft, satellites, missile defense, human space flight, and launch systems and services worldwide. Market cap at $50.56B, most recent closing price at $67.50. P/S ratio at 69%. Revenue grew by 30.% during the most recent quarter ($19,383M vs. $14,910M y/y). Accounts receivable grew by 8.89% during the same time period ($6,847M vs. $6,288M y/y). Receivables, as a percentage of current assets, decreased from 15.33% to 13.66% during the most recent quarter (comparing 3 months ending 2012-03-31 to 3 months ending 2011-03-31). Revenue grew by 30.% during the most recent quarter ($19,383M vs. $14,910M y/y). Inventory grew by 21.65% during the same time period ($32,738M vs. $26,912M y/y). Inventory, as a percentage of current assets, decreased from 65.62% to 65.3% during the most recent quarter (comparing 3 months ending 2012-03-31 to 3 months ending 2011-03-31).

3. Arcelor Mittal (NYSE: MT) : Engages in the production and marketing of steel worldwide. Market cap at $21.53B, most recent closing price at $13.79. P/S ratio at 23%. Revenue grew by 2.34% during the most recent quarter ($22,703M vs. $22,184M y/y). Accounts receivable grew by -0.69% during the same time period ($7,939M vs. $7,994M y/y). Receivables, as a percentage of current assets, decreased from 21.% to 20.87% during the most recent quarter (comparing 3 months ending 2012-03-31 to 3 months ending 2011-03-31). Revenue grew by 2.34% during the most recent quarter ($22,703M vs. $22,184M y/y). Inventory grew by -1.81% during the same time period ($21,204M vs. $21,595M y/y). Inventory, as a percentage of current assets, decreased from 56.73% to 55.74% during the most recent quarter (comparing 3 months ending 2012-03-31 to 3 months ending 2011-03-31).

4. Cummins (NYSE: CMI) : Designs, manufactures, distributes, and services diesel and natural gas engines, electric power generation systems, and engine-related component products worldwide. Market cap at $17.62B, most recent closing price at $91.68. P/S ratio at 95%. Revenue grew by 15.85% during the most recent quarter ($4,472M vs. $3,860M y/y). Accounts receivable grew by 4.44% during the same time period ($2,684M vs. $2,570M y/y). Receivables, as a percentage of current assets, decreased from 39.57% to 36.68% during the most recent quarter (comparing 3 months ending 2012-04-01 to 3 months ending 2011-03-27). Revenue grew by 15.85% during the most recent quarter ($4,472M vs. $3,860M y/y). Inventory grew by 8.17% during the same time period ($2,382M vs. $2,202M y/y). Inventory, as a percentage of current assets, decreased from 33.91% to 32.55% during the most recent quarter (comparing 3 months ending 2012-04-01 to 3 months ending 2011-03-27).

5. Murphy Oil: Engages in the exploration and production of oil and gas properties worldwide. Market cap at $8.74B, most recent closing price at $45.01. P/S ratio at 31%. Revenue grew by 11.53% during the most recent quarter ($6,994.52M vs. $6,271.67M y/y). Accounts receivable grew by -20.09% during the same time period ($1,485.06M vs. $1,858.53M y/y). Receivables, as a percentage of current assets, decreased from 47.39% to 39.03% during the most recent quarter (comparing 3 months ending 2012-03-31 to 3 months ending 2011-03-31). Revenue grew by 11.53% during the most recent quarter ($6,994.52M vs. $6,271.67M y/y). Inventory grew by -11.8% during the same time period ($661.68M vs. $750.18M y/y). Inventory, as a percentage of current assets, decreased from 19.13% to 17.39% during the most recent quarter (comparing 3 months ending 2012-03-31 to 3 months ending 2011-03-31).

6. Energizer Holdings: Manufacturers and sells primary batteries, portable lighting, and personal care products worldwide. Market cap at $4.58B, most recent closing price at $70.07. P/S ratio at 98%. Revenue grew by 6.42% during the most recent quarter ($1,101.8M vs. $1,035.3M y/y). Accounts receivable grew by -15.46% during the same time period ($759.6M vs. $898.5M y/y). Receivables, as a percentage of current assets, decreased from 37.53% to 31.73% during the most recent quarter (comparing 3 months ending 2012-03-31 to 3 months ending 2011-03-31). Revenue grew by 6.42% during the most recent quarter ($1,101.8M vs. $1,035.3M y/y). Inventory grew by -8.03% during the same time period ($686.4M vs. $746.3M y/y). Inventory, as a percentage of current assets, decreased from 31.18% to 28.68% during the most recent quarter (comparing 3 months ending 2012-03-31 to 3 months ending 2011-03-31).

7. Corn Products: Together with its subsidiaries, manufactures and sells various ingredients to food and industrial customers in North America, South America, Asia, Africa, and Europe. Market cap at $3.82B, most recent closing price at $50.05. P/S ratio at 60%. Revenue grew by 7.86% during the most recent quarter ($1,574.2M vs. $1,459.5M y/y). Accounts receivable grew by 4.86% during the same time period ($885M vs. $844M y/y). Receivables, as a percentage of current assets, decreased from 43.44% to 41.36% during the most recent quarter (comparing 3 months ending 2012-03-31 to 3 months ending 2011-03-31). Revenue grew by 7.86% during the most recent quarter ($1,574.2M vs. $1,459.5M y/y). Inventory grew by 3.8% during the same time period ($819M vs. $789M y/y). Inventory, as a percentage of current assets, decreased from 40.61% to 38.27% during the most recent quarter (comparing 3 months ending 2012-03-31 to 3 months ending 2011-03-31).

8. Omnicare: Provides pharmaceuticals, and related pharmacy and ancillary services to long-term health care institutions. Market cap at $3.48B, most recent closing price at $30.77. P/S ratio at 58%. Revenue grew by 4.42% during the most recent quarter ($1,593.07M vs. $1,525.57M y/y). Accounts receivable grew by -3.44% during the same time period ($992.79M vs. $1,028.17M y/y). Receivables, as a percentage of current assets, decreased from 44.69% to 43.15% during the most recent quarter (comparing 3 months ending 2012-03-31 to 3 months ending 2011-03-31). Revenue grew by 4.42% during the most recent quarter ($1,593.07M vs. $1,525.57M y/y). Inventory grew by -5.68% during the same time period ($354.27M vs. $375.59M y/y). Inventory, as a percentage of current assets, decreased from 16.32% to 15.4% during the most recent quarter (comparing 3 months ending 2012-03-31 to 3 months ending 2011-03-31).

9. SPX (NYSE: SPW) : Provides flow technology products, test and measurement products, thermal equipment and services, and industrial products and services worldwide. Market cap at $3.34B, most recent closing price at $66.01. P/S ratio at 62%. Revenue grew by 18.31% during the most recent quarter ($1,165.2M vs. $984.9M y/y). Accounts receivable grew by 7.79% during the same time period ($1,291.7M vs. $1,198.4M y/y). Receivables, as a percentage of current assets, decreased from 49.13% to 39.75% during the most recent quarter (comparing 3 months ending 2012-03-31 to 3 months ending 2011-04-02). Revenue grew by 18.31% during the most recent quarter ($1,165.2M vs. $984.9M y/y). Inventory grew by 2.15% during the same time period ($628.1M vs. $614.9M y/y). Inventory, as a percentage of current assets, decreased from 25.21% to 19.33% during the most recent quarter (comparing 3 months ending 2012-03-31 to 3 months ending 2011-04-02).

10. Westlake Chemical: Manufactures and markets basic chemicals, vinyls, polymers, and fabricated polyvinyl chloride (PVC) building products. Market cap at $3.26B, most recent closing price at $48.90. P/S ratio at 88%. Revenue grew by 19.33% during the most recent quarter ($1,034.87M vs. $867.25M y/y). Accounts receivable grew by 8.6% during the same time period ($444.61M vs. $409.42M y/y). Receivables, as a percentage of current assets, decreased from 26.56% to 24.76% during the most recent quarter (comparing 3 months ending 2012-03-31 to 3 months ending 2011-03-31). Revenue grew by 19.33% during the most recent quarter ($1,034.87M vs. $867.25M y/y). Inventory grew by -5.35% during the same time period ($422.4M vs. $446.26M y/y). Inventory, as a percentage of current assets, decreased from 28.95% to 23.52% during the most recent quarter (comparing 3 months ending 2012-03-31 to 3 months ending 2011-03-31).

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.

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Kapitall's Danny Guttridge does not own any of the shares mentioned above. Accounting data sourced from Google Finance. All other data sourced from Finviz.

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